credit report

Examples of credit report in the following topics:

• Obtaining Credit

  • The credit card company uses the credit report, provided by the credit bureau, to determine if the lender is likely to pay back the loan.
  • Types of credit include: bank credit, consumer credit, public credit, and investment credit.
  • Credit history or credit report is, in many countries, a negative record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy.
  • The term "credit reputation" can either be used synonymous to credit history or to credit score.
  • However, lenders make credit granting decisions based on both ability to repay a debt (income) and willingness (the credit report) as indicated by a history of regular, unmissed payments.

• Ratings

  • Bond credit rating agencies assess and report the credit worthiness of a corporation's or government's debt issues.
  • In investment, the bond credit rating assesses the credit worthiness of a corporation's or government's debt issue.
  • The credit rating is analogous to a credit rating for individuals.
  • These are bonds that are rated below investment grade by the credit rating agencies.
  • Credit ratings are used to report on the credit worthiness of a bond issuing company or government

• Hamilton's Economic Policy

  • In 1789, Congress authorized Hamilton to assess the public debt situation and to submit reports with recommendations for strengthening the government's credit.
  • In his "Report on Public Credit," Hamilton also made a controversial proposal to streamline debt repayment by assuming state debt into the federal debt, essentially making the federal government responsible for all debt repayment and giving it much more power.
  • In Hamilton's "Second Report on the Public Credit," submitted to Congress in 1790, he recommended the chartering of a national bank, modeled on the Bank of England.
  • In his reports, Hamilton also helped draft proposals for the U.S.
  • Secretary of the Treasury, Alexander Hamilton , shown here in a 1792 portrait by John Trumbull, released the “Report on Public Credit” in January 1790.

• Credit Ratings

  • Credit ratings are determined by credit ratings agencies.
  • First, the Basel II agreement requires banks to report their one-year probability if they applied internal ratings-based approach for capital requirements.
  • Therefore, some rating agencies simply report short-term ratings.
  • A credit score is primarily based on credit report information, typically from one of the three major credit bureaus: Experian, TransUnion, and Equifax.
  • The credit bureaus all have their own credit scores: Equifax's ScorePower, Experian's PLUS score, and TransUnion's credit score, and each also sells the VantageScore credit score.

• Loss Restoration

  • Under International Financial Reporting Standards, once a fixed asset has been revalued its book value can be adjusted periodically to market value using the cost model or the revaluation model.
  • The asset account is debited (increased) for the increase in value or credited (decreased) for a decrease in value.
  • An increase in the asset's value should not be reported on the income statement; instead an equity account is credited called "Revaluation Surplus. " Revaluation surplus is reported in the other comprehensive income sub-section of the owner's equity section in the balance sheet.
  • When the credit balance in the revaluation surplus account zeros out, an impairment loss is reported on the income statement.
  • The asset's new book value can be divided by its remaining useful life to adjust the amount of depreciation expense reported on the income statement after the revaluation.

• Reporting Fair Value

  • ABC records a journal entry debiting Dividends Receivable for USD 50,000 and crediting Dividend Income for USD 50,000.
  • The Dividend Receivable is reported on the balance sheet under current assets and Dividend Income is reported on the income statement under a section for other income.
  • Changes in fair value are debited (for gains in fair value) or credited (for losses) to a fair value adjustment account reported on the balance sheet to adjust the investment account balance to its end of period fair value.
  • If the investment is considered a "trading security" or stock purchased for the purpose of selling it in the near term, the balancing debit or credit is charged to an unrealized loss or gain reported on the income statement.
  • If the investment is an "available for sale" security, the balancing debit or credit goes to an unrealized loss or gain account reported in the other comprehensive income section of owner's equity on the balance sheet.

• Reporting Contingencies

  • Contingencies are reported as liabilities if it is probable they will incur a loss, and their amounts can be reasonably estimated.
  • Gain contingencies are reported on the income statement when they are realized (earned).
  • A warranty expense is debited for the provision amount that will offset product sales revenue in the income statement and a credit is posted to warranty provision liability.
  • As the warranty claims are made, the liability account is debited and cash is credited for the cost of the repair.
  • Conservative accounting principles state that companies should report loss contingencies as they occur.

• Accounting for Sale of Stock

  • Credit additonal paid in capital (to account for the difference between par value and sell value)
  • If the company plans to re issue the shares in the future, it would hold them in treasury and report the reduction in stockholder's equity on the balance sheet.
  • Credit additional paid in capital (the difference between sale price and purchase price)

• Reporting Financing Activities

  • Reporting financing activities involves determining if cash is received or paid out due to financing activities such as issuing stock or paying dividends.
  • However, when a company makes a loan (by extending credit to a customer, for example), it is not partaking in a financing activity.
  • Extending credit is an investing activity, so all cash flows related to that loan fall under cash flows from investing activities, not financing activities.
  • Generally speaking, the rules for reporting financing activities include the following:

• Special Reporting

  • Irregular items require special reporting procedures, and include discontinued operations, extraordinary items, and the reporting of the resultant EPS.
  • They are reported separately, and net of taxes, so that stakeholders can better predict future cash flows.
  • Earnings per Share: If a company reports any irregular items on its income statement, then it must report earnings per share for those items.
  • There are two forms of earnings per share that are reported: basic and diluted.
  • Line items typically include profits or losses from operations, dividends paid, the issue or redemption of stock, and any other items charged or credited to retained earnings.